President Mwai Kibaki, from the PNU party, and prime minister Raila Odinga, of the ODM party, are known antagonists. However, their positions within Kenya’s grand political coalition was the solution Kofi Annan settled on after violence broke out following the 2007 elections.
Since the coalition was established political wrangling has been confined to verbal backstabbing and internal bickering. In late February tensions rose between the two leading men after Odinga tried to suspend two government ministers who were being investigated for corruption. Kibaki went against Odinga’s decision, stating he was the only one that could suspend ministers. “This issue was blown out of portion for a few days,” says Joe Delvaux, a research analyst from Insparo, a fund investing in Africa. “People are so sensitive to political sparring that some speculated that this difference in interpretation of the constitution could have led to a breakdown in the coalition. I think they were a long way off anything like that.”
During Euromoney’s stay in Nairobi the two ruling men came together and supported constitutional reform aimed at preventing a fresh outbreak of violence following the 2012 elections and improving Kenya’s democratic standing. The reform is being discussed in hearings that will be presided over by six Kenyan judges and three international judges for the next few months with a national referendum planned for August 2010.
But despite the positive rhetoric surrounding the constitutional reform, there is still a feeling that important issues, such as corruption and the incitement of inter-ethnic violence, are being sidelined. “If some of the big political players that were involved and responsible for the 2007 violence were prosecuted then that would be a real game-changer – it would affect the way that Kenyan politics has been run and will run in the future,” says Aly-Khan Satchu, chief executive of Rich Management, a Kenya investment advisory firm.
“We have the 2012 elections hanging over our heads and still no one has been prosecuted. There is a growing sense that nothing has yet been dealt with and the political risk that was below the radar until that election is still a concern. On balance, do I think we are going to have a recurrence of the 2007 violence? No. But one senses that political will is not as high as it should be to sort these concerns out.”
Mike Du Toit, chief executive at CFC Stanbic Bank, one of the top five banks in Kenya, agrees. ” The level of trust is not what it was before,” he says. “You don’t have ethnic clashes at the level that happened and sweep it under the carpet.
“We made a mistake previously saying that business was divorced from politics – when there is a major disruption in the political arena it becomes clear they aren’t separated. Many of the rating agencies downgraded Kenya’s risk profile as a result of the political issues and then some double downgraded on the back of the financial crisis. Even though people realized that Kenya was less impacted by the financial crisis, it is the political situations that have prevented Kenya from being upgraded again.”
see also:
Kenya takes stock
M-Pesa miracle
